Budgeting is hard. It requires difficult choices and frequently leaves government leaders open to criticism. What if there was a way to make the budgeting process more engaging, transparent, and straightforward, allowing cities to get ahead of this criticism and defend difficult choices?
It’s called performance-based budgeting: allocating funds based on programmatic results that contribute to organizational goals. Performance-based budgeting uses evidence to maximize the allocation of funds toward government programs that work and away from those that don’t. GovEx’s Performance-Based Budgeting Guide walks readers through the steps to implementing performance-based budgeting and highlights how cities across the United States are carrying out these practices.
GovEx has worked with several cities on improving their budgeting practices. As we engage with cities in performance-based budgeting, we’ll share our experiences in a series of blog posts. For the first post, we’ll focus on how Bellevue, WA, approached Step 3 (Identify an objective interdisciplinary team to evaluate budget requests and proposals and make recommendations based on current fiscal year overview) in GovEx’s Performance-Based Budgeting Guide and how the City’s elevated its budget proposals and evaluation process.
Bellevue has been doing budgeting for outcomes for several years in its Budget One process, but it wanted to reinforce the connection between budgeting and the City’s performance program. In April, as part of the What Works Cities initiative, GovEx visited Bellevue to train the City’s Results Teams on evaluating metrics in support of budget proposals and making funding recommendations.
Bellevue relies on its Results Teams to help Budget One run smoothly. Teams are composed of city staff from varying levels and departments. Each member brings a unique governmental perspective to the conversation, challenging the group to think differently and thoroughly about funding each proposal. Additionally, team members are asked to think about proposals and their recommendations from the community’s viewpoint, asking questions such as, “Does this proposal benefit a particular neighborhood or is it focused citywide?” and “Does this proposal support a necessary or desired governmental function?”
The number of submitted budget proposals has been steadily increasing, so Bellevue was looking for a standardized way to evaluate each proposal and analyze the effectiveness of that proposal’s supporting metrics (metrics that enable the City and departments to see if proposals are achieving their expected outcomes). The City settled on six criteria to analyze proposals and metrics: well-rounded family of measures, actionable metrics, outcome-oriented metrics, reliable data sources, appropriate update frequency, and aspirational but realistic targets.
Each city will inevitably approach performance-based budgeting differently, but considering how Bellevue dealt with evaluating budget proposal metrics and defined its metric criteria can provide a foundation for discussion in your city. Let’s dive a little deeper into how Bellevue explained these criteria.
Well-rounded family of measures: A well-rounded family of measures means that there are multiple types of metrics supporting the proposal (e.g., outcome, output, efficiency, and community metrics). Having different types of metrics enables you to determine progress more accurately and get a better sense of what needs to be done or changed to take informed action.
Actionable metrics: Actionable means that departments have the ability to control or influence how these metrics perform. Choosing actionable metrics to support budget proposals encourages departments to be thoughtful about what they’re measuring and promotes accountability in performance.
Outcome-oriented metrics: Outcome-oriented metrics are focused on community priorities and get to the heart of what residents care about and want the city to address.
Reliable data source: A reliable data source is one the city feels confident enough about the quality of the data to release to the public. This could mean that there is a defined process for data collection, a commonly accepted definition of the data, data used in operations, an established quality control process, or that the data may be validated by comparing with third party data source.
Appropriate update frequency: Appropriate update means that data for metrics can be updated frequently enough to be used in decision making. Having data readily available and up-to-date is a necessity for making informed decisions. Not all data points need the same update frequencies. It’s important to think strategically about what the appropriate update frequency is when selecting metrics to track.
Aspirational but realistic targets: Aspirational but realistic targets for metrics should be lofty and encourage effort, but also be an accurate reflection of the department’s goals and where the department wants to go. There are differing views about how to best set targets (see GovEx’s Setting Performance Targets: Getting Started Guide for more information).
Cities approach performance-based budgeting in a variety of ways tailored to their needs and culture. Bellevue’s leaders recognized the importance of revising the budget proposal evaluation process to coordinate with the City’s priorities and align with the community’s desired outcomes. The City thought strategically about what a good budget proposal looks like and how to tell if the supporting budget proposal metrics make sense. Bellevue recognizes the importance of engaging proposal writers and Results Teams in the revision process and drawing on their expertise. Going forward, Bellevue will continue to revamp and update its performance-based budgeting process through with an annual review and conversations with budget proposal writers and Results Team members.
Does your city do performance-based budgeting? Do you have any budgeting success stories you’d like to share? How do you evaluate your budget proposals? Please share your experiences with us at email@example.com.